Managing project risks can be challenging, as the number of phases and the length of the project can be overwhelming. More than just identifying them, you must measure the risk severity and their impact on the different steps of the development process.

To help with this, most project owners create a risk management matrix. It is an excellent tool for risk analysis and identifying the consequences they can bring to the project.

But for the risk assessment matrix to work as expected, every part of your template must be well-structured. Everything must be aligned with the project and its main objectives, from the template format to the metrics used to identify risks.

In this article, we will show you how to make the perfect risk assessment matrix template. Follow each step carefully, and you’ll end up with a perfect tool for measuring the project risk probability and ways to avoid them.

The risk matrix document is a tool business owners and project managers use to identify potential risks involved in a project or business structure. Along with that, these risk matrices are also responsible for measuring the consequences if a risk occurs.

Once you have identified risks that are involved, you can plan the best strategies to avoid them or minimize the impacts. The template can be used for different industries and business types. 

Each template must be designed aiming at the company’s main objectives. With this, it can become way easier to identify strategic risks and how to manage them.

As we mentioned before, by identifying the risk likelihood and its major impacts, you’ll be able to better manage strategies to mitigate it. Not only that but by identifying operational risks, you can better plan your project’s progress and the requirements of each step. Factors like timeline and budget can be directly affected by these risks, and having them identified previously can help the company and development team to create defensive strategies.

Moreover, it can be a decisive factor in continuing or cancelling a project’s development. If the risk impact is more significant than this project's benefits, it might be a better idea to stop the development.

The risk management process impacts not only a project but also the company’s health. If you’re planning on operational changes or any core alteration of your business, the business risk assessment matrix can be a reliable tool to evaluate its probability of success.

When creating a risk matrix template, two main pieces of information are indispensable for making quality measurements and planning on the best strategy to avoid them. These two factors should always be considered regardless of your risk assessment type.

The first one is the severity, and the other one is called likelihood. Here is what each one of them means:

Severity

As the name suggests, severity relates to how much that risk can impact your business or project. There are five levels of seriousness, going from mild risks that will slightly impact the company or project to catastrophic risks that will significantly affect the organization and project development.

Here are the five levels of risk and what each one means:

Insignificant

If your risk is classified as insignificant, it means that it won’t bring any negative consequences to the project or business. They will likely be ignored during the risk management plan and won’t present any threats to the company if not dealt with.

Minor

The minor risk means that it might cause negative impacts on your business or project, but it has a small potential to do so. This kind of risk is more likely to impact secondary aspects of the development. This means that the overall success will most likely not be affected in case it happens.

Moderate

The moderate risk can have slightly more serious consequences for your project but can usually be prevented or mitigated. It brings a moderate threat and can impact the success of the development. This kind of threat should not be ignored since it can affect financial and operational aspects.

Critical

Critical risks can have a significant impact on your business or project. They should be carefully analyzed and avoided whenever possible. 

They can severely impact multiple aspects of the organization and should have high priority in the risk matrix.

Catastrophic

A catastrophic risk is the highest tier and means that the risk can bring extremely negative impacts for the entire business. They are the highest priority when building the risk matrix and, if not dealt with correctly, can cause the whole project to fail or the company to decrease production.

They should never be ignored, and the company must do anything possible to avoid them. They bring severe consequences that can be irreversible.

Likelihood

The likelihood is related to the probability of that risk to occur. The bigger the likelihood of a potential risk, the more probable it will happen throughout the development.

Like the severity, this information can be classified into five categories. It goes from “unlikely” to “most certainly.“ This can be extremely valuable when deciding which items and risks to focus on.

Here are the five likelihood categories you can have:

Unlikely

As the name suggests, an unlikely risk is almost impossible to happen and doesn't represent an alarming risk that needs to be worked on. Although they have a slight chance of happening, they are more likely to be ignored during project planning.

Seldom

These risks have a more significant probability of happening but are also not typical and will more likely not appear during strategy planning. They are considered uncommon, but it’s always good to take note of them.

Occasional

The occasional risks are more likely to occur. Mathematically speaking, they have a 50% chance of happening. They should not be looked over and can present threats to the company. It is a good idea to plan strategies to avoid them.

Likely

Likely risks are also common to happen and should be analyzed to ensure they don’t present any risks to the project. They have a high chance of occurring and should be highlighted in the risk matrix template.

Definite

Definite risks are almost certain to happen and should be carefully analyzed. On the likelihood spectrum, they are the most dangerous ones and, if not dealt with correctly, can generate numerous impacts.

The risk matrix document can have numerous types, each with a distinct objective. Understanding these differences is vital to ensure you use the suitable sheet for your purpose.

Here are some of the most common risk matrix template types you can find. Make sure to take a look at their differences to see which one fits your business needs best.

Risk Management Matrix Template

This risk matrix template focuses on identifying any factor that can impact the project, whether serious risks or small ones and plan on the best period to mitigate them. It features categories for classifying both the severity and likelihood of your project risks.

It is one of the easiest templates to make and can be used for any kind of project. It is a general template for all purposes related to risk occurring.

Risk Control Matrix Template

The risk control template is used especially when a severe risk is identified. It is a document focused on reflecting on this risk and the impacts it can have on both the project and the company overall.

With this template, you can better visualize all aspects and create strategies to avoid or minimize the impacts. It is a vital template when dealing with catastrophic risks.

IT Risk Assessment Matrix Template

As the name suggests, this risk matrix template is dedicated to IT projects. It helps with qualitative risk analysis and presents different categories for identifying unique risks for IT projects.

From network problems to code errors, the IT template must contain all the most common issues that can happen in this kind of environment. With this, you’ll be able to manage risk possibilities and plan on backup strategies in case something goes wrong.

Construction Risk Assessment Matrix Template

Like the IT risk document, the construction matrix is a document that focuses on a specific type of project and creates categories dedicated to these special needs. It is an essential spreadsheet for calculating the risk involved in every project step, including after construction. 

Construction projects can be complex because every part of it must be completely safe, and the risk matrix helps analyze each of these parts. The risks of a construction plan go far beyond just the building structure. There are job risks, natural risks, financial risks, and many other kinds. Using a template for this situation can be the best way to avoid the common risks and ensure a successful project without unexpected problems along the way.

When it comes to the creation of a project risk assessment template, there are numerous options available. From known software to specialized programs, each one has its own tools and features to help you measure risk impact and probability.

Among all the options available, we highly recommend using Microsoft Excel for this task. It not only has the best tools and features but is also an industry standard. This means that you won’t need extra programs for other business tasks you have.

If you don’t have a Microsoft Office activation key, you can find one at RoyalCDKeys for a considerably lower price. This way, you get all the tools necessary and still save money.

If you don’t want to create your risk matrix from scratch, there is no problem. Here are some free templates you can download and edit using Excel to fit your needs best.

Make sure to choose a template that contains all the necessary information for an effective evaluation of potential risks. Here are some examples:

Template #1

Simple risk matrix template. A document containing all the basic information for classifying risks based on severity and likelihood. It can be used for any type of project.

Get this template

Template #2

Risk control template. Document dedicated to planning strategies to mitigate and avoid any risk that can happen along the project. It also features spaces for evaluating severity and likelihood.

Get this template

Template #3

Simple project risk evaluation matrix. It has all the necessary information for classifying risks and also has a space for project identification at the top.

Get this template

Measuring risks is a vital part of any project management, and having an adequate template for this task is also essential. From the severity of it to the type of project you’re dealing with, everything will have a distinct impact and must be carefully planned to ensure the best results.

The process comes with the necessity of creating the best template for your business. Make sure to include all the categories necessary for precisely calculating the risks and developing strategies to avoid them.

Now that you know everything you need, it is time to start creating your own risk matrix. Make sure to look at each type of document to understand which one best fits your business. This way, you’ll have the perfect document for avoiding unnecessary risks during the project.